Since you asked: Does the CAA prohibition against gag clauses apply to ‘excepted benefits’?

Question

Does the Consolidated Appropriations Act, 2021 (CAA) gag clause prohibition compliance attestation requirement apply to benefits such as carved-out prescription drug or behavioral health coverage, employee assistance programs (EAPs) and ancillary benefits?

Answer

The CAA gag clause prohibition compliance attestation requirement applies to group health plan coverage but not to “excepted benefits.” Which benefits qualify as excepted benefits is determined on a case-by-case basis, with the assistance of an employer’s legal counsel.

Most employers provide group health benefits — including medical, prescription drug and behavioral health coverage — to their employees and their employees’ family members. The CAA gag clause prohibition compliance attestation requirement applies to these benefits, even if they are carved out. Often, employers also provide additional benefits such as vision and dental coverage, EAPs and other ancillary benefits (often virtual or app-based). These ancillary benefits cover specific healthcare issues such as diabetes, musculoskeletal and mental health conditions. The attestation requirement may apply to these benefits as well.

What is the CAA gag clause prohibition requirement?

Under the CAA, group health plans and issuers that offer group health insurance may not enter into agreements with providers, third-party administrators or other service providers that include a “gag clause,” defined as a contractual term that directly or indirectly restricts specific data and information that a plan or issuer can make available to another party.^[1] Plans and issuers must attest that they comply with these requirements by December 31 each year.

This requirement applies to fully insured and self-insured group health plans, including ERISA plans, non-federal governmental plans and church plans subject to the Internal Revenue Code. This means that major medical plans, prescription drug plans and behavioral health plans (even if they are carved out) are all required to submit the annual attestation; however, the following plans are not required to do so:

• Retiree-only plans
• Account-based plans (e.g., health reimbursement arrangements and individual coverage health reimbursement arrangements, health flexible spending accounts and health savings accounts)
• Plans that qualify as excepted benefits (including limited scope benefits and supplemental benefits)
• Short-term, limited-duration insurance
• Medicare, Medicaid, State Children’s Health Insurance Program plans, the TRICARE program, the Indian Health Service program and Basic Health Program plans

What is an excepted benefit?

There are four categories of excepted benefits:

• Benefits excepted in all circumstances, such as onsite clinics, automobile insurance, liability insurance, workers compensation, and accidental death and dismemberment coverage
• Limited excepted benefits, such as limited scope vision or dental benefits; certain healthcare flexible spending accounts; and benefits for long-term care, nursing home care, home healthcare or community-based care
• Non-coordinated excepted benefits, such as specified disease or illness coverage (e.g., cancer policies) and hospital indemnity or other fixed indemnity insurance (e.g., accident indemnity insurance)
• Supplemental excepted benefits, such as coverage supplemental to Medicare or to the Civilian Health and Medical Program of the Department of Veterans Affairs or to TRICARE or similar coverage that is supplemental to coverage provided under a group health plan that is provided under a separate policy, certificate or contract of insurance

What is a supplemental excepted benefit?

Benefits ancillary to an employer’s major medical plan may be required to file a gag clause prohibition compliance attestation unless the benefit is determined to be a supplemental excepted benefit.

Employee assistance programs

EAPs must meet four requirements to qualify as excepted benefits. The EAP cannot:

• Provide significant benefits in the nature of medical care
• Be coordinated with benefits under another group health plan and cannot act as a gatekeeper
• Require employee contributions
• Have any cost sharing for its services

The first requirement above is the hardest to interpret given that the government has not issued guidance on what constitutes “significant benefits in the nature of medical care” (e.g., visit limits, costs).

Other supplemental benefits

These benefits will need to be reviewed on an employer plan-by-plan basis, as the rules for determining a plan’s excepted benefit status are not well laid out. While many supplemental benefit vendors share “legal opinions” with their potential clients regarding the excepted benefit status of their products, employers will want to conduct an independent review with their legal counsel to determine if the product qualifies as an excepted benefit.

Who determines whether a benefit is excepted?

While WTW can provide information about the requirements for determining whether a benefit is excepted — and therefore not subject to the CAA’s gag clause prohibition requirements — the actual determination should be made by employers in conjunction with their legal counsel.

Takeaways

• Major medical, prescription drug and behavioral health plans must be ready to submit the first annual gag clause prohibition compliance attestation by December 31, 2023, for the time period from December 27, 2020, until the date of the attestation.
• An attestation may be required for employer-provided benefits ancillary to the major medical, prescription drug and behavioral health plans, unless the ancillary benefit is considered an excepted benefit.
• Companies should engage their legal counsel in determining whether a benefit qualifies as an excepted benefit for purposes of the gag clause prohibition compliance attestation requirement.

Footnote

1. See “Departments issue guidance on CAA’s prohibition against gag clauses,” Insider, March 2023. Return to article undo